Stanley Thai: 'we'll profit from NHS savings drive'

Stanley Thai, executive chairman of Malaysian glove manufacturer Supermax, on
how overseas manufacturers will benefit from an NHS savings drive, his plans
for a "global glove city" and why he believes it will make his
business a "household name".

Malaysian rubber glove manufacturer Supermax has no shortage of plans for the coming years, but they don’t include diversification. “Ours is a recession proof industry and I can sell the same product to the whole world,” explains founder Stanley Thai.

The NHS, which is trying to find £1bn of savings in its supply chain by 2016, is about to illustrate his point, he says. One area being targeted is the £4.6bn spent annually on consumables. The NHS believes it can save money by sourcing goods such as surgical gloves directly from manufacturers. UK distributors may lose out, but for manufacturers such as Supermax, which produces 18bn rubber gloves a year, cutting out the middleman can only be good news.

“We are one of three companies shortlisted to buy from source; two primary, one backup. I believe we’re in a primary position, but [in any case], we’ll get some of the business,” says Thai.

For Thai, who grew up in poverty among 13 siblings, it is another example of the Malaysian company’s increasingly global reach. “In the future, we’re a global company, not a Malaysian company,” he says. Thai started the business in 1987 in his spare time while working at a Malaysian textile business.

The Aids crisis led the US Food and Drug Administration (FDA) to specify the use of standardised rubber gloves during medical examinations in 1986. As the world’s largest rubber producer, Thai knew Malaysia would inevitably win much of the business that would ensue, and he set about sourcing and selling gloves after work. The time difference between the US and Malaysia allowed him to trade, using a fax machine in his brother-in-law’s office.

“I bought low, sold high and laughed all the way to the bank. I could make $60,000 gross profit on one 20ft container. My only costs were my own salary and office expenses – mainly sending faxes.”

Thai soon went full time. At 29, just two years after he’d started trading, he made his first million dollars. He used a subsequent crash in the rubber price in 1989 to buy cheap manufacturing facilities from weakened competitors. Since 1994, Supermax has built a factory every two years. It also has distribution centres in Brazil, Germany, Australia, Belgium and the US, where it makes the majority of its revenues.

Last year’s sales of $310m are expected to grow by 20pc this year. The company also recently opened up a sales office in Germany and Thai says he’d been surprised how easily and cheaply he’s been able to pick up European graduate talent. “We can get people for €18,000 a year. On the manufacturing side, we’d like engineers from the UK. I get people fresh – 80pc of our senior management we originally got directly from school.”

Thai’s goal is to build a household brand. He believes a growing 'hygiene market’ will increase consumer demand for disposable gloves, to which Supermax can add scents and moisturisers. He also expects demand from Asia, which currently represents just 5pc of sales, to pick up dramatically.

In anticipation of increased demand, Supermax is currently developing what Thai calls a “global glove city” at Bukit Kapar in Malaysia, which will see production rise to 24bn gloves within 18 months, and 48bn within a decade.

It will begin with six integrated factories and a biofuel processing plant to power the manufacturing.

The company, which mainly sells its own brand to the health care market, is the world’s second largest rubber glove producer, with 12pc of the global market. Thai has long had his eye on the number one position held by Top Glove Corp – a contract manufacturer with 23pc market share.

Thai admits it was his impatience to compete with Top Glove that led to a disastrous acquisition of a competitor, APLI, in 2005.

“I thought the short cut was to buy a company in the food service and nursing home market. I was too aggressive and acquired the wrong company. It was full of rubbish so I had to cut my investment in 2008.”

He says he wouldn’t acquire again unless the target was prepared to commit to full disclosure during due diligence, but admits this is unlikely in the case of competitors. Instead, Thai is focusing on organic growth – but he insists that doesn’t mean slowing down – hence the 'glove city’.

“We’re confident the glove city project will make Supermax a household name – like Kleenex.”